Member Since: 22nd Apr 2004
24th Feb 2014
24th Sep 2012
Hi Sorry to hijack this article but I have a question regarding service charge sinking funds.
Case is a limited company that built some flats and sold some but retained and rented out others. Sold flats actually pay amount per year towards 5 yearly external decoration. Company has not paid over any money in respect of flats owned and rented out. Company is aware of this liability but how should this be shown in limited company accounts?
Eg Dr Service charge costs Cr Provisions / liabilities ?
Also is this allowable for corporation tax relief in the limited company?
21st Sep 2012
Yes for the short term lets the landlords (the limited company that originally built the properties) are responsible for the costs of communal services at the same rate as the long leaseholders. But how should the company liability (re short term lets) be accounted for in the limited company accounts for future costs (say external decoration once every 5 years) ?
Should these be provided for on an annual basis as a provision for future costs (Dr Repairs Cr Liabilities) and if so are these allowable for corporation tax relief?
Or are they disallowed until such time as the actual expenditure is paid?
Or should they merely be accounted for at the time the expenditure actually happens?
Thanks in advance.
26th Jul 2012
For the sake of clarity....
Just come across this post and your answer.
You refer to accruing for the surcharge at the year end if a late return / payment before the year end,
However, if the return is for the quarter ending the same day as the accounts year end then return will be submitted by 1 month after the year end and due for payment approx 10 days after that.
Would you still accrue for this ?
Thanks in advance.
25th Jun 2010
So for the sake of clarity..
Thanks for all the comments and so for the sake of clarity, in simple terms:
UITF40 covers "contract" WIP and this will be included as Debtors & Turnover with appropriate profit
and SSAP9 will cover non-contract WIP and this will be at lower of cost & NRV.
24th Jun 2010
So to sum up...
So to sum up the position:
Two builders could build a house in the year to 31/3/2010 at a cost of £100,000 with a sale of £200,000 on 1 April 2010.
Builder A who contracted with an individual to build a house for £200,000 will account for £100,000 profit in p/e 31/3/2010 under UITF40 for revenue recognition showing £200,000 as turnover.
Builder B who built speculatively and then sold will account for £100,000 profit in p/e 31/3/2011. The p/e 31/3/2010 having all costs carried forward as WIP but no profit.
24th Jun 2010
SSAP 9 & UITF40
SSAP 9 might state that lower of cost or NRV but surely UITF 40 replaces this.
Therefore in considering UITF40
1) The revenue should not be recognised as the right to consideration does not occur unitl the occurence of a critical event ie the sale of the property.
2) the transaction is performed over more than one accounting period
3) the prudentially calculated profit can be assessed with reasonable certainty as we know the selling price for the property.
So does this mean Work In Progress should be shown including prudentially calculated profit but that this amount is not to be included as debtors & turnover.
22nd Mar 2006
Response to previous comments
No worry about posting a related question.
The MOT fees if treated correctly as a disbursement are exempt.
Exempt supplies are NOT included within the turnover for the VAT threshold calculation.
Regarding Frauke's point, what were the disbursements in your case as MOT fees are clearly disbursements when treated correctly on the invoice. Other items recharged would depend on the exact nature of the charge and who the service was provided for.
However, the MOT is a service provided by a third party for the final customer and not for the VAT trader and therefore if trader simply passes on the cost (with no profit or additions) then it does qualify as a disbursement and is exempt.
Back to the original question, has anyone actually got a view / opinion on the reissuing of the invoices?